WPC: ‘We missed a generation with Windows Mobile,’ Ballmer says

Ah, Microsoft’s mobile operating system. These days, the phrase is almost an oxymoron — like “Microsoft Works.” Sure, companies like HTC have been able to finagle Windows Mobile into something attractive by layering their own UIs on top, but WinMo hasn’t changed much since I was using a Motorola Q three years ago.

The last big update Microsoft made was Windows Mobile 6.5, released back in October. In February, Microsoft announced Windows Phone 7, an operating system Microsoft hopes will let its mobile business jump from the last generation of smart phones to the next generation.

“We missed a generation with Windows Mobile,” CEO Steve Ballmer said this morning at Microsoft’s Worldwide Partner Conference in Washington, D.C. “We really did miss almost a release cycle.”

Indeed, Windows Mobile 6.5 is barely in the same class as Apple’s iOS, which powers the iPhone, and Google’s Android, which is quickly gaining steam with phones like the Motorola Droid and HTC Evo. Microsoft dropped the ball by not aggressively updating Windows Mobile, allowing Apple, Google and Research in Motion (BlackBerry) to zip right on by in terms of market share.

And after the Kin “social phones” crashed and burned, some people are questioning Microsoft’s true future in mobile.

“I think that it definitely affects Microsoft’s credibility in the mobile market,” mobile analyst Azita Arvani said of the Kin program, which lasted just seven weeks in the market before Microsoft pulled the plug. “It was a blow to them.”

Courtesy of Microsoft

The Kin Two (left) and Kin One were killed after seven weeks on the market.

The Kin phones, which were priced like smart phones but were not smart phones, were another example of Microsoft’s being about, oh, two years behind. Two years ago, when Microsoft acquired Sidekick-maker Danger, Sidekicks were all the rage among the teenage and young-adult demographic. They weren’t as expensive as newfangled smart phones, but the clever slide-out QWERTY devices still allowed kids to easily stay connected with their friends.

But after several delays, reportedly due to internal Microsoft strife, the Kin phones were released into a very different market. Gone, apparently, is the audience that wants limited smart-phone-like devices — these days, people want apps and computing power.

“We have moved so far away from that. Since then, all these devices have become open, mobile computing platforms,” Arvani said. “I think that the big thing about the Kin platform was it wasn’t a platform for new applications.”

A successful mobile platform now needs to be extensible, she said. Users must be able to take the base phone they buy and personalize it with apps, surf the Web on it, watch YouTube videos with it. The Kin One and Kin Two merely let people connect to their social networks and share media with their friends.

Windows Phone 7, set for release by the holidays, likely is Microsoft’s last chance to return to the mobile market as a major player. The full-featured mobile OS will have a sleek user interface, integration with many services and an application ecosystem.

Well, in theory. Right now, there is no public app ecosystem. Windows Mobile apps will not be forward compatible, so the new platform must start from scratch. Sure, Microsoft has been working hard to get developers creating Windows Phone 7 apps, but it’s unknown how successful the software superpower has been.

Microsoft does have legacy on its side. Its developer tools should be familiar to many app makers — Windows Phone 7 apps can be built on Microsoft’s Silverlight, .NET and XNA platforms. But the company, Arvani said, needs keep its platform open and flexible — that means, for example, Microsoft should let people use a Google app, if they want, instead of forcing Bing on them.

“In a market where people have iTunes and people depend on Google for search, you can’t close your system and ask people to buy that,” Arvani said. “If people feel like they’re locked in, they won’t give (Microsoft) a chance at all.”

Another thing Microsoft should watch out for: intrusive advertising. Two weeks ago, Microsoft told advertising professionals about a new Windows Phone 7 system called “Toast” that enables advertisers to remotely push ads onto smart phones, even if the corresponding apps are closed.

Kostas Mallios, Microsoft’s general manager for Strategy and Business Development, said Toast will turn any Windows Phone 7 device into an “ad-serving machine.”

“It’s really the most intrusive advertising idea I’ve heard,” Arvani said. “I think they’re going to get a lot of resistance from the end-users, the development community and the advertising community.”

Nevertheless, Microsoft on Monday shared the current lineup of device manufacturers for Windows Phone 7 devices. During his keynote, Ballmer showed a slide that included the following companies: Dell, HTC, Garmin-Asus, LG, Sony Ericsson and Toshiba.

Last week, Microsoft also said Windows Phone 7 devices will be available on all four major U.S. wireless carriers, giving the platform a significant leg up on Apple. The iPhone currently is on only AT&T, and rumors continue to swirl that Verizon will get the iPhone next January.

But can Microsoft successfully skip the current smart phone generation and deliver a successful platform for the future? Or will, as some analysts have started wondering, Windows Phone 7 flop just like the Kin?